The Pros and Cons of a Real Property Report vs. Title Insurance in Alberta
As a licensed REALTOR® in Alberta, I often get asked about the differences between obtaining a Real Property Report (RPR) and opting for title insurance. Both serve essential roles in real estate transactions, but they offer different benefits and limitations. Deciding which is right for your situation depends on your needs, risk tolerance, and the specifics of the property transaction.
Here’s a breakdown to help Alberta residents make an informed decision.
What is a Real Property Report (RPR)?
An RPR is a legal document prepared by a surveyor that outlines a property’s boundaries and structures, including fences, decks, and sheds. It shows any encroachments, easements, or bylaw violations, offering a clear picture of the property’s compliance with municipal standards.
Pros of a Real Property Report
Clarity and Accuracy
An RPR provides a detailed visual representation of the property and ensures everything is within legal boundaries.
Municipal Compliance
It confirms compliance with municipal bylaws, which can save buyers from costly corrections later.
Negotiation Tool
An RPR can identify issues (e.g., an encroaching fence) that sellers must address before closing.
Essential for Certain Transactions
Some lenders and lawyers require an RPR to finalize a transaction.
Cons of a Real Property Report
Cost and Time
Preparing an RPR can be expensive, typically costing $700–$1,200. Additionally, it can take weeks to obtain, potentially delaying the transaction.
Limited Use in Older Properties
If an RPR hasn’t been updated to reflect additions or changes (e.g., a new deck), it may not be valid, requiring further expense and effort.
What is Title Insurance?
Title insurance protects against certain risks related to property ownership, such as unknown encroachments, survey defects, and fraud. Unlike an RPR, it doesn’t confirm compliance but mitigates the financial impact of potential issues.
Pros of Title Insurance
Cost-Effective
A one-time fee (around $250–$500) makes title insurance a budget-friendly option.
Quick to Obtain
It can often be purchased immediately, avoiding delays in the transaction process.
Broad Protection
Covers unknown risks, such as fraud, title defects, or zoning violations that surface after the sale.
No Expiration
Coverage lasts as long as you own the property.
Cons of Title Insurance
No Compliance Assurance
Unlike an RPR, it doesn’t confirm compliance with municipal bylaws or provide a physical representation of the property.
Reactive, Not Preventative
Title insurance compensates for issues after they arise but doesn’t resolve underlying problems (e.g., a deck violating setback rules).
Limited Coverage
It doesn’t protect against known issues disclosed before the purchase or improvements made after closing.
Which Option is Right for You?
The decision depends on your priorities:
Choose an RPR if you value knowing the property complies with legal standards, particularly for properties with significant additions or structures. An RPR can also be critical in resolving boundary disputes before closing.
Opt for title insurance if you’re looking for cost-effective protection against unexpected risks and prefer a faster transaction process. It’s also a practical option when time constraints or budget concerns make obtaining an RPR impractical.
Can You Have Both?
In some cases, both an RPR and title insurance are used together, offering the best of both worlds: assurance of compliance and coverage against unforeseen issues.
As your trusted REALTOR® , I’m here to guide you through this decision, ensuring a smooth and informed real estate transaction. If you have any questions or need help navigating your options, feel free to reach out!
